Central Bank forex purchases and rising remittances push net foreign assets to $3.4 billion by April 2025
Sri Lanka’s banking sector has recorded a dramatic turnaround in its net foreign assets (NFAs), posting a staggering 2,028% year-on-year (y-o-y) increase by April 2025. This growth, driven primarily by the Central Bank’s aggressive foreign exchange purchases and rising external inflows, marks a significant shift from the negative balances seen just a year earlier.
According to data from the Central Bank of Sri Lanka, the sector’s total net foreign assets stood at Rs. 1,019.8 billion (approximately $3.4 billion) at the end of April. This is a sharp contrast to April 2024, when NFAs were in the red at Rs. 52.9 billion ($180 million).
The Central Bank itself contributed substantially to the turnaround, increasing its NFAs by 237.3% in rupee terms, from a negative Rs. 315.3 billion ($1.05 billion) to a positive Rs. 433 billion ($1.4 billion). This build-up is largely attributed to forex purchases from the domestic market, totaling $697.3 million during the first four months of 2025.
Commercial banks also saw notable gains, with net foreign assets rising by 123.6% y-o-y to Rs. 586.8 billion ($1.96 billion). This growth was fueled by a steady rise in worker remittances and export earnings, signaling improved external sector confidence.
By April, remittances through the formal banking system reached $2.46 billion—an 18.3% increase from the previous year. Export earnings also posted a 6.4% y-o-y rise, totaling $4.31 billion for the same period.
Notably, net foreign assets across Sri Lanka’s banking sector turned positive for the first time in May 2024 since the COVID-era plunge in April 2020. The shift reflects a broader stabilization in foreign exchange dynamics as the country continues to recover from the economic shocks of recent years.
The Central Bank’s strategic accumulation of reserves, coupled with external inflows, has strengthened the sector’s foreign asset position, offering a vital buffer amid ongoing debt repayments and gradual economic recovery.